Written by Victoria McCarron
Draft versions of the Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) Order 2023 and accompanying explanatory memorandum have been published, intending to tighten the regulations surrounding cryptoasset promotions and bring them in line with the same standards as the broader financial services industry.
It also aims to facilitate consumer understanding of the risks associated with cryptoasset investments.
The Order extends the scope of the financial promotions' restriction to include financial promotions in respect of certain cryptoassets.
More specifically, the draft Order amends the relevant financial promotions legislation by:
- creating a new controlled investment for "qualifying cryptoassets";
- amending relevant controlled activities to incorporate qualifying cryptoassets; and
- creating and extending certain exemptions to the restriction in respect of qualifying cryptoasset promotions, including the creation of a temporary, limited exemption for cryptoasset businesses registered with the FCA for AML purposes.
The Order has an implementation period of four months from the day after the Order is made before it enters into force. This was recently reduced from six months in light of market turmoil and the perception of increasing consumer risks and possible harm relating to cryptoassets.
Further discussion surrounding the UK government’s proposals on a new regulatory regime for cryptoassets can be found here.
The instrument, and relevant [FCA] rules, will provide for the regulation of in-scope cryptoasset financial promotions. This is aimed at improving consumers’ understanding of the risks associated with cryptoasset investments and ensuring that cryptoasset promotions are held to the same standards as for broader financial services.